Guide to the California Density Bonus Law - BY JON GOETZ AND TOM SAKAI - Meyers Nave
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Guide to the California Density Bonus Law
BY JON GOETZ AND TOM SAKAI
REVISED JANUARY 2020
Table of Contents
INTRODUCTION AND OVERVIEW........................................................................................................ 2
HOW THE DENSITY BONUS WORKS................................................................................................... 3
DENSITY BONUS CHART........................................................................................................... 4
HOW THE DENSITY BONUS CAN HELP IN A FRIENDLY JURISDICTION....................................... 10
HOW THE DENSITY BONUS CAN HELP IN A HOSTILE JURISDICTION.......................................... 11
CEQA ISSUES IN DENSITY BONUS PROJECTS................................................................................. 11
USING THE DENSITY BONUS TO SATISFY INCLUSIONARY HOUSING REQUIREMENTS............ 11
DENSITY BONUS AND REPLACEMENT HOUSING........................................................................... 12
DENSITY BONUS IN THE COASTAL ZONE........................................................................................ 12
DENSITY BONUS - A FLEXIBLE TOOL............................................................................................... 12
DENSITY BONUS STATUTES.............................................................................................................. 13
ABOUT THE AUTHORS
JON GOETZ
E-mail: jgoetz@meyersnave.com
Direct: 800.464.3559
Jon Goetz is a Principal at Meyers Nave. He has over 30 years of experience in real estate, land
use, environmental, redevelopment, housing and municipal law. Jon represents private and public
entities in complex real estate development transactions, land use planning, public-private
development, infrastructure financing and affordable housing. He has advised on acquiring,
financing, leasing and disposing of all forms of improved and unimproved property.
TOM SAKAI
E-mail: tsakai@springbrookadvisors.com
Direct: 949.833.2599
Tom Sakai is the Principal of Springbrook Realty Advisors, Inc., a real estate consulting practice
located in Newport Beach. His practice specializes in consulting to land developers and
homebuilders, focusing on pro formas and feasibilities for master-planned communities, school
negotiations, assessment district and Mello-Roos financing, affordable housing issues, and other
services to the real estate industry.
MEYERS NAVE A professional law corporation | CALIFORNIA DENSITY BONUS LAW 2020 1
Introduction and Overview
Savvy housing developers are taking advantage of California’s Density Bonus Law, a mechanism which
allows them to obtain more favorable local development requirements in exchange for offering to build or
donate land for affordable or senior units. The Density Bonus Law (found in California Government Code
Sections 65915 – 65918) provides developers with powerful tools to encourage the development of
affordable and senior housing, including up to a 35% increase in project densities for most projects,
depending on the amount of affordable housing provided, and an 80% increase in density for projects which
are completely affordable. The Density Bonus Law is about more than the density bonus itself, however. It
is actually a larger package of incentives intended to help make the development of affordable and senior
housing economically feasible. Other tools include reduced parking requirements, and incentives and
concessions such as reduced setback and minimum square footage requirements. Often these other tools
are even more helpful to project economics than the density bonus itself, particularly the special parking
benefits. Sometimes these incentives are sufficient to make the project pencil out, but for other projects
financial assistance is necessary to make the project feasible.
In determining whether a development project would benefit from becoming a density bonus project,
developers also need to be aware that:
• The Density Bonus is a state mandate. A developer who meets the requirements of the state law is
entitled to receive the density bonus and other benefits as a matter of right. As with any state mandate,
some local governments will resist complying with the state requirement. But many local governments
favor the density bonus as a helpful tool to cut through their own land use requirements and local
political issues.
• Use of a density bonus may be particularly helpful in those jurisdictions that impose inclusionary
housing requirements for new developments.
• Special development bonuses are available for developers of commercial projects who partner with
affordable housing developers to provide onsite or offsite affordable housing. Special bonuses are also
available for condominium conversion projects and projects that include childcare facilities.
• The Legislature has recently added density bonuses for housing developments for foster youth, disabled
veterans, homeless persons and college students.
2 MEYERS NAVE A professional law corporation | CALIFORNIA DENSITY BONUS LAW 2020
How the Density Bonus Works
PROJECTS ENTITLED TO A DENSITY BONUS
Cities and counties are required to grant a density bonus and other incentives or concessions to housing
projects which contain one of the following:
• At least 5% of the housing units are restricted to very low income residents.
• At least 10% of the housing units are restricted to lower income residents.
• At least 10% of the housing units in a for-sale common interest development are restricted to moderate
income residents.
• 100% of the housing units (other than manager’s units) are restricted to very low, lower and moderate
income residents (with a maximum of 20% moderate).
• At least 10% of the housing units are for transitional foster youth, disabled veterans or homeless
persons, with rents restricted at the very low income level.
• At least 20% of the housing units are for low income college students in housing dedicated for full-time
students at accredited colleges.
• The project donates at least one acre of land to the city or county for very low income units, and the
land has the appropriate general plan designation, zoning, permits and approvals, and access to public
facilities needed for such housing.
• The project is a senior citizen housing development (no affordable units required).
• The project is a mobilehome park age-restricted to senior citizens (no affordable units required).
DENSITY BONUS AMOUNT
The amount of the density bonus is set on a sliding scale, based upon the percentage of affordable units at
each income level, as shown in the chart on the following page.
MEYERS NAVE A professional law corporation | CALIFORNIA DENSITY BONUS LAW 2020 3
DENSITY BONUS CHART*
FOSTER YOUTH/
AFFORDABLE UNIT VERY LOW INCOME LOW INCOME MODERATE INCOME LAND DONATION COLLEGE
SENIOR**** DISABLED VETS/
PERCENTAGE** DENSITY BONUS DENSITY BONUS DENSITY BONUS*** DENSITY BONUS STUDENTS
HOMELESS
5% 20% - - - 20% - -
6% 22.5% - - - 20% - -
7% 25% - - - 20% - -
8% 27.5% - - - 20% - -
9% 30% - - - 20% - -
10% 32.5% 20% 5% 15% 20% 20% -
11% 35% 21.5% 6% 16% 20% 20% -
12% 35% 23% 7% 17% 20% 20% -
13% 35% 24.5% 8% 18% 20% 20% -
14% 35% 26% 9% 19% 20% 20% -
15% 35% 27.5% 10% 20% 20% 20% -
16% 35% 27.5% 11% 21% 20% 20% -
17% 35% 30.5% 12% 22% 20% 20% -
18% 35% 32% 13% 23% 20% 20% -
19% 35% 33.5% 14% 24% 20% 20% -
20% 35% 35% 15% 25% 20% 20% 35%
21% 35% 35% 16% 26% 20% 20% 35%
22% 35% 35% 17% 27% 20% 20% 35%
23% 35% 35% 18% 28% 20% 20% 35%
24% 35% 35% 19% 29% 20% 20% 35%
25% 35% 35% 20% 30% 20% 20% 35%
26% 35% 35% 21% 31% 20% 20% 35%
27% 35% 35% 22% 32% 20% 20% 35%
28% 35% 35% 23% 33% 20% 20% 35%
29% 35% 35% 24% 34% 20% 20% 35%
30% 35% 35% 25% 35% 20% 20% 35%
31% 35% 35% 26% 35% 20% 20% 35%
32% 35% 35% 27% 35% 20% 20% 35%
33% 35% 35% 28% 35% 20% 20% 35%
34% 35% 35% 29% 35% 20% 20% 35%
35% 35% 35% 30% 35% 20% 20% 35%
36% 35% 35% 31% 35% 20% 20% 35%
37% 35% 35% 32% 35% 20% 20% 35%
38% 35% 35% 33% 35% 20% 20% 35%
39% 35% 35% 34% 35% 20% 20% 35%
40% 35% 35% 35% 35% 20% 20% 35%
100%***** 80% 80% 80% 35% 20% 20% 35%
*All density bonus calculations resulting in fractions are rounded up to the next whole number.
**Affordable unit percentage is calculated excluding units added by a density bonus.
***Moderate income density bonus applies to for sale units, not to rental units.
****No affordable units are required for senior units.
***** Applies when 100% of the total units (other than manager’s units) are restricted to very low, lower and moderate income (maximum 20% moderate).
4 MEYERS NAVE A professional law corporation | CALIFORNIA DENSITY BONUS LAW 2020
REQUIRED INCENTIVES AND CONCESSIONS
In addition to the density bonus, the city or county is also required to provide one or more “incentives” or
“concessions” to each project which qualifies for a density bonus (except that market rate senior citizen
projects with no affordable units, and land donated for very low income housing, do not appear to be entitled
to incentives or concessions). A concession or incentive is defined as:
• A reduction in site development standards or a modification of zoning code or architectural design
requirements, such as a reduction in setback or minimum square footage requirements; or
• Approval of mixed use zoning; or
• Other regulatory incentives or concessions which actually result in identifiable and actual cost
reductions.
The number of required incentives or concessions is based on the percentage of affordable units in the
project:
NO. OF INCENTIVES/ VERY LOW INCOME LOWER INCOME MODERATE INCOME
CONCESSIONS PERCENTAGE PERCENTAGE PERCENTAGE
1 5% 10% 10%
2 10% 20% 20%
3 15% 30% 30%
4 100% Low/Very 100% Low/Very 100% Low/Very
Low/Mod Low/Mod Low/Mod
(20% Moderate allowed) (20% Moderate allowed) (20% Moderate allowed)
The city or county is required to grant the concession or incentive proposed by the developer unless it
finds that the proposed concession or incentive does not result in identifiable and actual cost reductions,
would cause a public health or safety problem, would cause an environmental problem, would harm
historical property, or would be contrary to law. The Density Bonus Law restricts the types of
information and reports that a developer may be required to provide to the local jurisdiction in order to
obtain the requested incentive or concession. The local jurisdiction has the burden of proof in the event it
declines to grant a requested incentive or concession. Financial incentives, fee waivers and reductions in
dedication requirements may be, but are not required to be, provided by the city or county. The developer
may be entitled to the incentives and concessions even without a request for a density bonus.
OTHER FORMS OF ASSISTANCE
A development qualifying for a density bonus also receives two additional forms of assistance which have
important benefits for a housing project:
• Waiver or Reduction of Development Standards. If any other city or county development standard
would physically prevent the project from being built at the permitted density and with the granted
concessions/incentives, the developer may propose to have those standards waived or reduced. The city
or county is not permitted to apply any development standard which physically precludes the
construction of the project at its permitted density and with the granted concessions/incentives. The
city or county is not required to waive or reduce development standards that would cause a public health
or safety problem, cause an environmental problem, harm historical property, or would be contrary to
law. The waiver or reduction of a development standard does not count as an incentive or concession,
and there is no limit on the number of development standard waivers that may be requested or granted.
Development standards which have been waived or reduced utilizing this section include setback, lot
coverage and open space requirements, and should apply to building height limits as well. This ability to
force the locality to modify its normal development standards is sometimes the most compelling reason
for the developer to structure a project to qualify for the density bonus.
MEYERS NAVE A professional law corporation | CALIFORNIA DENSITY BONUS LAW 2020 5
• Maximum Parking Requirements. Upon the developer’s request, the city or county may not require
more than the following parking ratios for a density bonus project (inclusive of handicapped and guest
parking):
Studio 1 space
1 Bedroom 1 space
2 Bedroom 2 spaces
3 Bedroom 2 spaces
4 Bedroom 2.5 spaces
• Special Parking Requirements. Lower parking ratios apply to specified projects (although local
jurisdictions can require higher parking ratios if supported by a specified parking study):
Rental/for sale projects with at least 11% very low income or 20% lower 0.5 spaces per bedroom
income units, within 1/2 mile of accessible major transit stop
Rental projects 100% affordable to lower income, within 1/2 mile of 0.5 spaces per unit
accessible major transit stop
Rental senior projects 100% affordable to lower income, with paratransit 0.5 spaces per unit
service or within 1/2-half mile of accessible bus route (operating at least
eight times per day)
Rental special needs projects 100% affordable to lower income households, 0 spaces per unit
with paratransit service or within 1/2-half mile of accessible bus route
(operating at least eight times per day)
Rental supportive housing developments 100% affordable to lower income 0 spaces per unit
households
Onsite spaces may be provided through tandem or uncovered
parking, but not onstreet parking. Requesting these parking
standards does not count as an incentive or concession, but
the developer may request further parking standard reductions
as an incentive or concession. This is one of the most important
benefits of the density bonus statute. In many cases, achieving
a reduction in parking requirements may be more valuable
than the additional permitted units. In higher density
developments requiring the use of structured parking, the
construction cost of structured parking is very expensive,
costing upwards of $20,000 per parking space. While this
provision of the density bonus statute can be used to reduce
excessive parking requirements, care must be taken not to
impact the project’s marketability by reducing parking to
minimum requirements which lead to parking shortages.
AFFORDABLE HOUSING RESTRICTIONS
• Rental Units. Affordable rental units must be restricted by an
agreement which sets maximum incomes and rents for those
units. As of January 1, 2015, the income and rent restrictions
must remain in place for a 55 year term for very low or lower
income units (formerly only a 30 year term was required). Rents
must be restricted as follows:
6 MEYERS NAVE A professional law corporation | CALIFORNIA DENSITY BONUS LAW 2020• For very low income units, rents may not exceed 30% x 50% of the area median income for a
household size suitable for the unit.
• For lower income units, rents may not exceed 30% x 60% of the area median income for a household
size suitable for the unit.
• In 100% affordable housing developments, the rent for at least 20% of the units must meet the rent
standards of Health and Safety Code Section 50053, and the remaining units may instead meet Low
Income Housing Tax Credit rent standards.
• Area median income is determined annually by regulation of the California Department of Housing
and Community Development, based upon median income regulations adopted by the U.S.
Department of Housing and Urban Development.
• Rents must include a reasonable utility allowance.
• Household size appropriate to the unit means 1 for a studio unit, 2 for a one bedroom unit, 3 for a two
bedroom unit, 4 for a three bedroom unit, etc.
• For Sale Units. Affordable for sale units must be sold to the initial buyer at an affordable housing cost.
Housing related costs include mortgage loan payments, mortgage insurance payments, property taxes
and assessments, homeowner association fees, reasonable utilities allowance, insurance premiums,
maintenance costs, and space rent.
• For very low income units, housing costs may not exceed 30% x 50% of the area median income for
a household size suitable for the unit.
• For lower income units, housing costs may not exceed 30% x 70% of the area median income for a
household size suitable for the unit.
• For moderate income units, housing costs may not exceed 35% x 110% of the area median income
for a household size suitable for the unit.
• Buyers must enter into an equity sharing agreement with the city or county, unless the equity
sharing requirements conflict with the requirements of another public funding source or law. The
equity sharing agreement does not restrict the resale price, but requires the original owner to pay
the city or county a portion of any appreciation received on resale.
• The city/county percentage of appreciation is the purchase price discount received by the original
buyer, plus any down payment assistance provided by the city/county. (For example, if the original
sales price is $200,000, and the original fair market value is $250,000, and there is no city/county
down payment assistance, the city/county subsidy is $50,000, and the city/county’s share of
appreciation is 20%).
MEYERS NAVE A professional law corporation | CALIFORNIA DENSITY BONUS LAW 2020 7• The seller is permitted to retain its original down payment, the value of any improvements made to
the home, and the remaining share of the appreciation.
• The income and affordability requirements are not binding on resale purchasers (but if other public
funding sources or programs are used, the requirements may apply to resales for a fixed number of
years).
LOCAL GOVERNMENT PROCESSING OF DENSITY BONUS APPLICATIONS
Under new legislation effective in 2019, local governments are now required to notify developers what
information must be submitted for a complete density bonus application. Once a development application
is determined to be complete, the local government must notify the developer the level of density bonus
and parking ratio the development is eligible to receive. If the developer requests incentives, concessions,
waivers or reductions of development standards, the local jurisdiction is required to notify the developer if it
has submitted sufficient information necessary for the local government to make a determination on those
issues.
HOW THE DENSITY BONUS WORKS FOR 100% AFFORDABLE PROJECTS
2019 legislation requires local governments to grant an 80% density bonus to housing projects in which all
of the units (other than manager’s units) are restricted to very low, low and moderate income residents, with
a maximum of 20% restricted to moderate income units. If a 100% affordable project is located within a half
mile of a major transit stop, the local government may not impose any maximum density limits at all, and the
project is further entitled to receive a maximum height increase of up to three additional stories or 33 feet.
However, if the project receives a waiver from maximum controls on density, it is not eligible for the waiver or
reduction of any development standards which would otherwise be available. 100% affordable projects are
also entitled to a fourth incentive or concession.
HOW THE DENSITY BONUS WORKS FOR SENIOR PROJECTS
As shown in the Density Bonus Chart on page 4, a senior citizen housing development of at least 35 units
meeting the requirements of Section 51.3 or 51.12 of the Civil Code qualifies for a 20% density bonus. This
is a very desirable option for senior housing developments. In jurisdictions where the local ordinances do not
reduce the parking requirements for senior housing developments, the reduced parking requirements alone
may justify applying for a density bonus.
HOW THE DENSITY BONUS WORKS FOR STUDENT HOUSING PROJECTS
New legislation taking effect in 2019 requires cities and counties to grant a 35% density bonus for housing
developments that will include at least 20% of the units for low income college students. The housing must
be used exclusively for full-time students at accredited colleges, and must be subject to an operating
agreement or master lease with one or more colleges. Unlike the maximum income requirements for other
forms of affordable housing, resident income levels are determined through the student’s eligibility for the
state’s Cal Grant financial aid program. Affordable rent levels are also specially tailored for a student
population, with maximum rents established per bed for individual residents, rather than for the entire
apartment unit. Homeless students receive priority for affordable units.
HOW THE DENSITY BONUS WORKS FOR COMMERCIAL PROJECTS
The Density Bonus Law requires that cities and counties provide a “development bonus” to commercial
developers who partner with affordable housing developers for the construction of affordable housing on
the commercial project site, or offsite within the jurisdiction located near schools, employment and a major
transit stop. The commercial developer may participate through the donation of land or funds for the
8 MEYERS NAVE A professional law corporation | CALIFORNIA DENSITY BONUS LAW 2020affordable housing, or direct construction of the housing units. The partnership between the commercial
developer and the affordable developer can occur through a newly formed legal entity such as a corporation,
LLC or partnership, or can take the shape of a contractual agreement between the parties. To be eligible for
the development bonus, at least 30% of the housing units must be restricted to lower income residents or
15% of the housing units must be restricted to very low income residents. Unlike the primary Density Bonus
Law, there is no fixed amount of increased density awarded to the developer. Instead, the development
bonus can be any mutually agreeable incentive, including up to a 20% increase in development intensity,
floor area ratio, or height limits, up to a 20% reduction in parking requirements, use of a limited use
elevator, or an exception to a zoning ordinance or land use requirement. Commercial developers who need
extra leverage to obtain more favorable development standards for their project may want to consider
providing affordable housing in order to take advantage of the benefits of the development bonus.
HOW THE DENSITY BONUS WORKS FOR CONDOMINIUM CONVERSION PROJECTS
The density bonus statute provides for a density bonus of up to 25% for condominium conversion projects
providing at least 33% for the total units to low or moderate income households or 15% of the units to lower
income households. Many condominium conversion projects are not designed in a manner that allows them
to take advantage of the opportunity to construct additional units, but some projects may find this helpful.
HOW THE DENSITY BONUS WORKS FOR CHILDCARE
Housing projects that provide childcare are eligible for a separate density bonus equal to the size of the
childcare facility. The childcare facility must remain in operation for at least the length of the affordability
covenants. A percentage of the childcare spaces must also be made available to low and moderate income
families. A separate statute permits cities and counties to grant density bonuses to commercial and
industrial projects of at least 50,000 square feet, when the developer sets aside at least 2,000 square feet in
the building and 3,000 square feet of outside space for a childcare facility.
HOW TO OBTAIN A DENSITY BONUS THROUGH LAND DONATION
Many market rate housing developers are uncomfortable with building and marketing affordable units
themselves, whether due to their lack of experience with the affordable housing process or because of their
desire to concentrate on their core market rate homes. Other developers may have sites that are
underutilized in terms of project density. The Density Bonus Law contains a special sliding scale bonus for
land donation which allows those developers to turn over the actual development of the affordable units to
local agencies or experienced low income developers. The density bonus is available for the donation of at
least an acre of fully entitled land, with all needed public facilities and infrastructure, and large enough for
the construction of a high density very low income project containing 10% of the total homes in the
development. The parcel must be located within the boundary of the proposed development or, subject to
the approval of the jurisdiction, within one-fourth mile of the boundary of the proposed development. The
more units that can be built on the donated land, the larger the density bonus. Because of the parcel size
requirements, this option is only practical for larger developments. The land donation density bonus can be
combined with the regular density bonus provided for the development of affordable units, up to a maximum
35% density bonus. A master planned community developer needs to carefully evaluate the land donation
option as opposed to engaging an affordable housing developer to fulfill the project’s affordable housing
obligations. In many cases the master developer will prefer to control the affordable component of the
project through a direct agreement with the affordable housing developer, rather than allowing the local
government to control the project.
FLOOR AREA RATIO BONUSES
Under new legislation effective in 2019, a local jurisdiction is permitted to grant a floor area ratio bonus
rather than a traditional density bonus to certain high density affordable housing projects adjacent to public
MEYERS NAVE A professional law corporation | CALIFORNIA DENSITY BONUS LAW 2020 9transit. Eligible projects are also entitled to special parking ratios of one-tenth of a parking space per
affordable unit and one-half space per market rate unit. To be eligible for the floor area ratio bonus, the
project must restrict at least 20 percent of the units to very low income tenants, must be located within a
transit priority area or near a major transit stop, and must be in compliance with local height limits.
How the Density Bonus Can Help in a Friendly Jurisdiction
While the Density Bonus Law is often used by developers to obtain more housing than the local jurisdiction
would ordinarily permit, it can also be a helpful land use tool in jurisdictions which favor the proposed project
and want to provide support. Planners in many cities and counties may be disposed by personal ideology
or local policy to encourage the construction of higher density housing and mixed use developments near
transit stops and downtown areas, but are hampered by existing general plan standards and zoning from
approving these sorts of projects. Elected officials often support these projects too, but may find it politically
difficult to oppose neighborhood and environmental groups over the necessary general plan amendments,
zoning changes and CEQA approvals.
The density bonus can provide a useful mechanism for increasing allowable density without requiring
local officials to approve general plan amendments and zoning changes. A project that satisfies the
requirements of the Density Bonus Law often can obtain the necessary land use approvals through the
award of the density bonus units and requested concessions and incentives, without having to amend the
underlying land use requirements. Friendly local officials may encourage the use of the density bonus to
“force” the jurisdiction to approve a desired project.
10 MEYERS NAVE A professional law corporation | CALIFORNIA DENSITY BONUS LAW 2020How the Density Bonus Law Can Help in a Hostile Jurisdiction
It is important to know that the density bonus is a state law requirement which is mandatory on cities and
counties, even charter cities which are free from many other state requirements. A developer who meets
the law’s requirements for affordable or senior units is entitled to the density bonus and other assistance
as of right, regardless of the locality’s desires (subject to limited health and safety exceptions). The density
bonus statute can be used to achieve reductions in development standards or the granting of concessions
or incentives from jurisdictions that otherwise would not be inclined to grant those items. Examples might
include a reduction in parking standards if those standards are deemed excessive by the developer, or other
reductions in development standards if needed to achieve the total density permitted by the density bonus.
Developers who nonetheless encounter hostility from local jurisdictions are provided several tools to ensure
that a required density bonus is actually granted. Developers are entitled to an informal meeting with a local
jurisdiction which fails to modify a requested development standard. If a developer successfully sues the
locality to enforce the density bonus requirements, it is entitled to an award of its attorneys’ fees. The
obligation to pay a developer’s attorneys’ fees is a powerful incentive for local jurisdictions to voluntarily
comply with the state law density bonus requirements, even when the jurisdiction is not in favor of its effects
on the project.
CEQA Issues in Density Bonus Projects
Although there is no specific density bonus exemption from the California Environmental Quality Act, many
density bonus projects are likely candidates for urban infill and affordable housing exemptions from CEQA.
One commonly invoked exemption is the Class 32 urban infill exemption found in CEQA Guidelines Section
15332. That exemption is available if the project is consistent with applicable general plan designation and
zoning, the site is five acres or less and surrounded by urban uses, is not habitat for endangered, rare or
threatened species, does not have any significant effects relating to traffic, noise, air quality or water
quality, and is adequately served by utilities and public services. Other exemptions are available for high
density housing projects near major transit stops (CEQA Guidelines Section 15195) and affordable housing
projects of up to 100 units (CEQA Guidelines Section 15194).
A 2011 case, Wollmer v. City of Berkeley, clarified the use of the CEQA infill exemption for density bonus
projects. In that case, an opponent of a Berkeley density bonus project challenged the City’s use of the
urban infill exemption on the grounds that the City’s modifications and waivers of development standards,
as required under the Density Bonus Law, meant that the project was not consistent with existing zoning.
The court rejected that argument, finding that the modifications required by the Density Bonus Law did not
disqualify the project from claiming the exemption.
Not all density bonus projects will qualify for one of these CEQA exemptions, however. Sometimes the
additional density provided to non-exempt projects may bring the project out of the coverage of an existing
CEQA approval for a general plan, specific plan or other larger project. For instance, if a previously approved
environmental impact report analyzed a 100 unit project as the largest allowed under existing zoning, but
the developer is able to qualify for 120 units with a density bonus, the existing EIR may not cover the larger
project. The larger density bonus project may require additional CEQA analysis for approval.
Using the Density Bonus to Satisfy Inclusionary Housing Requirements
Many of California’s cities and counties have adopted inclusionary housing ordinances, which typically
require that a specified percentage of units in a new housing development be restricted as affordable units.
The inclusionary requirements significantly reduce income from rental units and sales prices of for-sale
homes. In today’s tight housing market, compliance with local inclusionary requirements may make many
projects economically infeasible. The density bonus provides one method for developers to improve the
economics of their project while still complying with the inclusionary A 2013 case, Latinos Unidos del Valle
MEYERS NAVE A professional law corporation | CALIFORNIA DENSITY BONUS LAW 2020 11de Napa y Solano v. County of Napa, held that inclusionary units qualify housing requirements as affordable
units for purposes of the Density Bonus Law. The case confirmed that the density bonus is a financial tool
available to help developers achieve city and county inclusionary housing requirements.
Density Bonus and Replacement Housing
Developers obtaining a density bonus are required to replace existing units which were previously occupied
by very low or lower income households or subject to rent control, when those units have been demolished
or vacated prior to the density bonus application. The housing development must also meet the applicable
affordable housing standards, including the replacement units. As a result of uncertainty about how to apply
these standards when the income levels of prior residents is unknown. The Density Bonus Law establishes
a rebuttable presumption for the income level of the replacement unit when the income level of the actual
prior resident is unknown.
Density Bonus in the Coastal Zone
When affordable housing is proposed in the coastal zone, the Density Bonus Law’s focus on encouraging the
development of affordable housing could clash with the California Coastal Act’s focus on environmental
protection. Legislation effective in 2019 now requires the density bonus to be administered in the Coastal
Zone in a manner that is consistent and harmonized with the California Coastal Act. This legislation
overturns a 2016 appellate court ruling, Kalnel Gardens, LLC v. City of Los Angeles, which found that a
proposed housing project that violates the Coastal Act as a result of a density bonus could be denied on that
basis. The court in Kalnel Gardens held that the Density Bonus Law is subordinate to the Coastal Act, but the
new language attempts to strike a balance between the state goals of promoting housing and protecting the
coast.
Density Bonus – A Flexible Tool
The Density Bonus Law can be a powerful tool for different types of development projects, whether they
are traditional affordable housing projects, predominantly market rate housing developments, or senior
projects. Obtaining greater density can help the developer of any project bring costs and financing sources
into line by putting more homes on the land, reducing the per unit land costs. Use of the favorable parking
requirements can reduce the amount of costly land needed for parking. The incentives and concessions to
be provided by the local government can provide a helpful way to modify development requirements which
may stand in the way of a successful project. Of course there is a price to pay for these benefits—the
affordable units needed to earn the density bonus. Developers need to make a cost-benefit determination
whether the cost of compliance is worth the benefits. But the Density Bonus Law is unquestionably a useful
option for housing developers trying to make financial sense of projects in today’s economy.
12 MEYERS NAVE A professional law corporation | CALIFORNIA DENSITY BONUS LAW 2020Density Bonus Statutes development standards pursuant to subdivision (e),
Government Code Sections 65915 – 65918. whether the applicant has provided adequate
Effective as of January 1, 2020 information for the local government to make a
determination as to those incentives, concessions, or
waivers or reductions of development standards.
65915. (a) (1) When an applicant seeks a density
bonus for a housing development within, or for the
(ii) Any determination required by this subparagraph
donation of land for housing within, the jurisdiction of
shall be based on the development project at the time
a city, county, or city and county, that local
the application is deemed complete. The local
government shall comply with this section. A city,
government shall adjust the amount of density bonus
county, or city and county shall adopt an ordinance
and parking ratios awarded pursuant to this section
that specifies how compliance with this section will be
based on any changes to the project during the course
implemented. Failure to adopt an ordinance shall not
of development.
relieve a city, county, or city and county from complying
with this section.
(b) (1) A city, county, or city and county shall grant one
density bonus, the amount of which shall be as
(2) A local government shall not condition the
specified in subdivision (f), and, if requested by the
submission, review, or approval of an application
applicant and consistent with the applicable
pursuant to this chapter on the preparation of an
requirements of this section, incentives or concessions,
additional report or study that is not otherwise required
as described in subdivision (d), waivers or reductions
by state law, including this section. This subdivision
of development standards, as described in
does not prohibit a local government from requiring
subdivision (e), and parking ratios, as described in
an applicant to provide reasonable documentation
subdivision (p), when an applicant for a housing
to establish eligibility for a requested density bonus,
development seeks and agrees to construct a
incentives or concessions, as described in subdivision
housing development, excluding any units permitted
(d), waivers or reductions of development standards,
by the density bonus awarded pursuant to this section,
as described in subdivision (e), and parking ratios, as
that will contain at least any one of the following:
described in subdivision (p).
(A) Ten percent of the total units of a housing
(3) In order to provide for the expeditious processing of
development for lower income households, as defined
a density bonus application, the local government shall
in Section 50079.5 of the Health and Safety Code.
do all of the following:
(B) Five percent of the total units of a housing
(A) Adopt procedures and timelines for processing a
development for very low income households, as
density bonus application.
defined in Section 50105 of the Health and Safety
Code.
(B) Provide a list of all documents and information
required to be submitted with the density bonus
(C) A senior citizen housing development, as defined
application in order for the density bonus application to
in Sections 51.3 and 51.12 of the Civil Code, or a
be deemed complete. This list shall be consistent with
mobilehome park that limits residency based on age
this chapter.
requirements for housing for older persons pursuant to
Section 798.76 or 799.5 of the Civil Code.
(C) Notify the applicant for a density bonus whether
the application is complete in a manner consistent with
(D) Ten percent of the total dwelling units in a common
the timelines specified in Section 65943.
interest development, as defined in Section 4100 of
the Civil Code, for persons and families of moderate
(D) (i) If the local government notifies the applicant
income, as defined in Section 50093 of the Health and
that the application is deemed complete pursuant to
Safety Code, provided that all units in the development
subparagraph (C), provide the applicant with a
are offered to the public for purchase.
determination as to the following matters:
(E) Ten percent of the total units of a housing
(I) The amount of density bonus, calculated pursuant
development for transitional foster youth, as defined in
to subdivision (f), for which the applicant is eligible.
Section 66025.9 of the Education Code, disabled
veterans, as defined in Section 18541, or homeless
(II) If the applicant requests a parking ratio pursuant to
persons, as defined in the federal McKinney-Vento
subdivision (p), the parking ratio for which the
Homeless Assistance Act (42 U.S.C. Sec. 11301 et seq.).
applicant is eligible.
The units described in this subparagraph shall be
subject to a recorded affordability restriction of 55
(III) If the applicant requests incentives or concessions
years and shall be provided at the same affordability
pursuant to subdivision (d) or waivers or reductions of
level as very low income units.
MEYERS NAVE A professional law corporation | CALIFORNIA DENSITY BONUS LAW 2020 13(F) (i) Twenty percent of the total units for lower income share of associated common area facilities. The units
students in a student housing development that meets described in this subparagraph shall be subject to a
the following requirements: recorded affordability restriction of 55 years.
(I) All units in the student housing development will be (G) One hundred percent of the total units, exclusive of
used exclusively for undergraduate, graduate, or a manager’s unit or units, are for lower income
professional students enrolled full time at an institution households, as defined by Section 50079.5 of the
of higher education accredited by the Western Health and Safety Code, except that up to 20 percent of
Association of Schools and Colleges or the the total units in the development may be for
Accrediting Commission for Community and Junior moderate-income households, as defined in Section
Colleges. In order to be eligible under this subclause, 50053 of the Health and Safety Code.
the developer shall, as a condition of receiving a
certificate of occupancy, provide evidence to the city, (2) For purposes of calculating the amount of the
county, or city and county that the developer has density bonus pursuant to subdivision (f), an applicant
entered into an operating agreement or master lease who requests a density bonus pursuant to this
with one or more institutions of higher education for the subdivision shall elect whether the bonus shall be
institution or institutions to occupy all units of the awarded on the basis of subparagraph (A), (B), (C), (D),
student housing development with students from that (E), (F), or (G) of paragraph (1).
institution or institutions. An operating agreement or
master lease entered into pursuant to this subclause (3) For the purposes of this section, “total units,” “total
is not violated or breached if, in any subsequent year, dwelling units,” or “total rental beds” does not include
there are not sufficient students enrolled in an units added by a density bonus awarded pursuant to
institution of higher education to fill all units in the this section or any local law granting a greater density
student housing development. bonus.
(II) The applicable 20-percent units will be used for (c) (1) (A) An applicant shall agree to, and the city,
lower income students. For purposes of this clause, county, or city and county shall ensure, the continued
“lower income students” means students who have a affordability of all very low and low-income rental units
household income and asset level that does not exceed that qualified the applicant for the award of the density
the level for Cal Grant A or Cal Grant B award recipients bonus for 55 years or a longer period of time if required
as set forth in paragraph (1) of subdivision (k) of by the construction or mortgage financing assistance
Section 69432.7 of the Education Code. The eligibility program, mortgage insurance program, or rental
of a student under this clause shall be verified by an subsidy program.
affidavit, award letter, or letter of eligibility provided by
the institution of higher education that the student is (B) (i) Except as otherwise provided in clause (ii), rents
enrolled in, as described in subclause (I), or by the for the lower income density bonus units shall be set at
California Student Aid Commission that the student an affordable rent, as defined in Section 50053 of the
receives or is eligible for financial aid, including an Health and Safety Code.
institutional grant or fee waiver, from the college or
university, the California Student Aid Commission, or (ii) For housing developments meeting the criteria of
the federal government shall be sufficient to satisfy this subparagraph (G) of paragraph (1) of subdivision (b),
subclause. rents for all units in the development, including both
base density and density bonus units, shall be as
(III) The rent provided in the applicable units of the follows:
development for lower income students shall be
calculated at 30 percent of 65 percent of the area (I) The rent for at least 20 percent of the units in the
median income for a single-room occupancy unit type. development shall be set at an affordable rent, as
defined in Section 50053 of the Health and Safety
(IV) The development will provide priority for the Code.
applicable affordable units for lower income students
experiencing homelessness. A homeless service (II) The rent for the remaining units in the development
provider, as defined in paragraph (3) of subdivision (d) shall be set at an amount consistent with the maximum
of Section 103577 of the Health and Safety Code, or rent levels for a housing development that receives an
institution of higher education that has knowledge of a allocation of state or federal low-income housing tax
person’s homeless status may verify a person’s status credits from the California Tax Credit Allocation C
as homeless for purposes of this subclause. ommittee.
(ii) For purposes of calculating a density bonus granted (2) An applicant shall agree to, and the city, county, or
pursuant to this subparagraph, the term “unit” as used city and county shall ensure that, the initial occupant
in this section means one rental bed and its pro rata of all for-sale units that qualified the applicant for the
14 MEYERS NAVE A professional law corporation | CALIFORNIA DENSITY BONUS LAW 2020award of the density bonus are persons and families by, either a lower or very low income household.
of very low, low, or moderate income, as required, and
that the units are offered at an affordable housing cost, (B) For the purposes of this paragraph, “replace” shall
as that cost is defined in Section 50052.5 of the Health mean either of the following:
and Safety Code. The local government shall enforce
an equity sharing agreement, unless it is in conflict with (i) If any dwelling units described in subparagraph (A)
the requirements of another public funding source or are occupied on the date of application, the proposed
law. The following apply to the equity sharing housing development shall provide at least the same
agreement: number of units of equivalent size to be made available
at affordable rent or affordable housing cost to, and
(A) Upon resale, the seller of the unit shall retain the occupied by, persons and families in the same or lower
value of any improvements, the downpayment, and income category as those households in occupancy. If
the seller’s proportionate share of appreciation. The the income category of the household in occupancy is
local government shall recapture any initial subsidy, not known, it shall be rebuttably presumed that lower
as defined in subparagraph (B), and its proportionate income renter households occupied these units in the
share of appreciation, as defined in subparagraph (C), same proportion of lower income renter households to
which amount shall be used within five years for any of all renter households within the jurisdiction, as
the purposes described in subdivision (e) of Section determined by the most recently available data from
33334.2 of the Health and Safety Code that promote the United States Department of Housing and Urban
home ownership. Development’s Comprehensive Housing Affordability
Strategy database. For unoccupied dwelling units
(B) For purposes of this subdivision, the local described in subparagraph (A) in a development with
government’s initial subsidy shall be equal to the fair occupied units, the proposed housing development
market value of the home at the time of initial sale shall provide units of equivalent size to be made
minus the initial sale price to the moderate-income available at affordable rent or affordable housing cost
household, plus the amount of any downpayment to, and occupied by, persons and families in the same
assistance or mortgage assistance. If upon resale the or lower income category as the last household in
market value is lower than the initial market value, then occupancy. If the income category of the last
the value at the time of the resale shall be used as the household in occupancy is not known, it shall be
initial market value. rebuttably presumed that lower income renter
households occupied these units in the same
(C) For purposes of this subdivision, the local proportion of lower income renter households to all
government’s proportionate share of appreciation shall renter households within the jurisdiction, as
be equal to the ratio of the local government’s initial determined by the most recently available data from
subsidy to the fair market value of the home at the time the United States Department of Housing and Urban
of initial sale. Development’s Comprehensive Housing Affordability
Strategy database. All replacement calculations
(3) (A) An applicant shall be ineligible for a density resulting in fractional units shall be rounded up to the
bonus or any other incentives or concessions under next whole number. If the replacement units will be
this section if the housing development is proposed on rental dwelling units, these units shall be subject to a
any property that includes a parcel or parcels on which recorded affordability restriction for at least 55 years.
rental dwelling units are or, if the dwelling units have If the proposed development is for-sale units, the units
been vacated or demolished in the five-year period replaced shall be subject to paragraph (2).
preceding the application, have been subject to a
recorded covenant, ordinance, or law that restricts (ii) If all dwelling units described in subparagraph (A)
rents to levels affordable to persons and families of have been vacated or demolished within the five-year
lower or very low income; subject to any other form of period preceding the application, the proposed housing
rent or price control through a public entity’s valid development shall provide at least the same number
exercise of its police power; or occupied by lower or of units of equivalent size as existed at the highpoint
very low income households, unless the proposed of those units in the five-year period preceding the
housing development replaces those units, and either application to be made available at affordable rent or
of the following applies: affordable housing cost to, and occupied by, persons
and families in the same or lower income category as
(i) The proposed housing development, inclusive of the those persons and families in occupancy at that time, if
units replaced pursuant to this paragraph, contains known. If the incomes of the persons and families in
affordable units at the percentages set forth in occupancy at the highpoint is not known, it shall be
subdivision (b). rebuttably presumed that low-income and very low
income renter households occupied these units in the
(ii) Each unit in the development, exclusive of a same proportion of low-income and very low income
manager’s unit or units, is affordable to, and occupied renter households to all renter households within the
MEYERS NAVE A professional law corporation | CALIFORNIA DENSITY BONUS LAW 2020 15jurisdiction, as determined by the most recently (A) The concession or incentive does not result in
available data from the United States Department of identifiable and actual cost reductions, consistent with
Housing and Urban Development’s Comprehensive subdivision (k), to provide for affordable housing costs,
Housing Affordability Strategy database. All as defined in Section 50052.5 of the Health and Safety
replacement calculations resulting in fractional units Code, or for rents for the targeted units to be set as
shall be rounded up to the next whole number. If the specified in subdivision (c).
replacement units will be rental dwelling units, these
units shall be subject to a recorded affordability (B) The concession or incentive would have a specific,
restriction for at least 55 years. If the proposed adverse impact, as defined in paragraph (2) of
development is for-sale units, the units replaced shall subdivision (d) of Section 65589.5, upon public health
be subject to paragraph (2). and safety or the physical environment or on any real
property that is listed in the California Register of
(C) Notwithstanding subparagraph (B), for any Historical Resources and for which there is no feasible
dwelling unit described in subparagraph (A) that is or method to satisfactorily mitigate or avoid the specific,
was, within the five-year period preceding the adverse impact without rendering the development
application, subject to a form of rent or price control unaffordable to low-income and moderate-income
through a local government’s valid exercise of its police households.
power and that is or was occupied by persons or
families above lower income, the city, county, or city (C) The concession or incentive would be contrary to
and county may do either of the following: state or federal law.
(i) Require that the replacement units be made (2) The applicant shall receive the following number of
available at affordable rent or affordable housing cost incentives or concessions:
to, and occupied by, low-income persons or families.
If the replacement units will be rental dwelling units, (A) One incentive or concession for projects that
these units shall be subject to a recorded affordability include at least 10 percent of the total units for lower
restriction for at least 55 years. If the proposed income households, at least 5 percent for very low
development is for-sale units, the units replaced shall income households, or at least 10 percent for persons
be subject to paragraph (2). and families of moderate income in a common interest
development.
(ii) Require that the units be replaced in compliance
with the jurisdiction’s rent or price control ordinance, (B) Two incentives or concessions for projects that
provided that each unit described in subparagraph (A) include at least 20 percent of the total units for lower
is replaced. Unless otherwise required by the income households, at least 10 percent for very low
jurisdiction’s rent or price control ordinance, these income households, or at least 20 percent for persons
units shall not be subject to a recorded affordability and families of moderate income in a common interest
restriction. development.
(D) For purposes of this paragraph, “equivalent size” (C) Three incentives or concessions for projects that
means that the replacement units contain at least the include at least 30 percent of the total units for lower
same total number of bedrooms as the units being income households, at least 15 percent for very low
replaced. income households, or at least 30 percent for persons
and families of moderate income in a common interest
(E) Subparagraph (A) does not apply to an applicant development.
seeking a density bonus for a proposed housing
development if the the applicant’s application was (D) Four incentives or concessions for projects
submitted to, or processed by, a city, county, or city and meeting the criteria of subparagraph (G) of paragraph
county before January 1, 2015. (1) of subdivision (b). If the project is located within
one-half mile of a major transit stop, as defined in
(d) (1) An applicant for a density bonus pursuant to subdivision (b) of Section 21155 of the Public
subdivision (b) may submit to a city, county, or city Resources Code, the applicant shall also receive a
and county a proposal for the specific incentives or height increase of up to three additional stories, or 33
concessions that the applicant requests pursuant to feet.
this section, and may request a meeting with the city,
county, or city and county. The city, county, or city (3) The applicant may initiate judicial proceedings if
and county shall grant the concession or incentive the city, county, or city and county refuses to grant a
requested by the applicant unless the city, county, or requested density bonus, incentive, or concession. If a
city and county makes a written finding, based upon court finds that the refusal to grant a requested density
substantial evidence, of any of the following: bonus, incentive, or concession is in violation of this
section, the court shall award the plaintiff reasonable
16 MEYERS NAVE A professional law corporation | CALIFORNIA DENSITY BONUS LAW 2020attorney’s fees and costs of suit. Nothing in this any maximum controls on density pursuant to clause
subdivision shall be interpreted to require a local (ii) of subparagraph (D) of paragraph (3) of
government to grant an incentive or concession that subdivision (f) shall not be eligible for, and shall not
has a specific, adverse impact, as defined in paragraph receive, a waiver or reduction of development
(2) of subdivision (d) of Section 65589.5, upon health, standards pursuant to this subdivision, other than as
safety, or the physical environment, and for which there expressly provided in subparagraph (D) of paragraph
is no feasible method to satisfactorily mitigate or avoid (2) of subdivision (d) and clause (ii) of subparagraph
the specific adverse impact. Nothing in this subdivision (D) of paragraph (3) of subdivision (f).
shall be interpreted to require a local government
to grant an incentive or concession that would have (f) For the purposes of this chapter, “density bonus”
an adverse impact on any real property that is listed in means a density increase over the otherwise maximum
the California Register of Historical Resources. The city, allowable gross residential density as of the date of
county, or city and county shall establish procedures application by the applicant to the city, county, or city
for carrying out this section, that shall include legisla- and county, or, if elected by the applicant, a lesser
tive body approval of the means of compliance with this percentage of density increase, including, but not
section. limited to, no increase in density. The amount of density
increase to which the applicant is entitled shall vary
(4) The city, county, or city and county shall bear the according to the amount by which the percentage of
burden of proof for the denial of a requested affordable housing units exceeds the percentage
concession or incentive. established in subdivision (b).
(e) (1) In no case may a city, county, or city and county (1) For housing developments meeting the criteria of
apply any development standard that will have the subparagraph (A) of paragraph (1) of subdivision (b),
effect of physically precluding the construction of a the density bonus shall be calculated as follows:
development meeting the criteria of subdivision (b) at
PERCENTAGE PERCENTAGE
the densities or with the concessions or incentives LOW-INCOME DENSITY
permitted by this section. Subject to paragraph (3), UNITS BONUS
an applicant may submit to a city, county, or city and 10 20
county a proposal for the waiver or reduction of
development standards that will have the effect of 11 21.5
physically precluding the construction of a 12 23
development meeting the criteria of subdivision (b) at 13 24.5
the densities or with the concessions or incentives
permitted under this section, and may request a 14 26
meeting with the city, county, or city and county. If a 15 27.5
court finds that the refusal to grant a waiver or 17 30.5
reduction of development standards is in violation of
this section, the court shall award the plaintiff 18 32
reasonable attorney’s fees and costs of suit. Nothing in 19 33.5
this subdivision shall be interpreted to require a local 20 35
government to waive or reduce development standards
if the waiver or reduction would have a specific, adverse (2) For housing developments meeting the criteria of
impact, as defined in paragraph (2) of subdivision (d) subparagraph (B) of paragraph (1) of subdivision (b),
of Section 65589.5, upon health, safety, or the physical the density bonus shall be calculated as follows:
environment, and for which there is no feasible method
to satisfactorily mitigate or avoid the specific adverse PERCENTAGE PERCENTAGE
VERY LOW-INCOME DENSITY
impact. Nothing in this subdivision shall be interpreted UNITS BONUS
to require a local government to waive or reduce devel-
opment standards that would have an adverse impact 5 20
on any real property that is listed in the California Reg- 6 22.5
ister of Historical Resources, or to grant any waiver or 7 25
reduction that would be contrary to state or federal law.
8 27.5
(2) A proposal for the waiver or reduction of 9 30
development standards pursuant to this subdivision 10 32.5
shall neither reduce nor increase the number of
incentives or concessions to which the applicant is 11 35
entitled pursuant to subdivision (d).
(3) (A) For housing developments meeting the criteria
(3) A housing development that receives a waiver from of subparagraph (C) of paragraph (1) of subdivision (b),
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